Nick Goold
Dow Jones Index
The summer trading conditions continued to subdue activity in the US stock market as the market traded sideways. There was selling pressure on Tuesday after some small to medium-sized banks were downgraded, but investors were happy to buy ahead of support at 35,000
Thursday`s US inflation data was below expectations which saw equities rally quickly, but it proved short-lived as investors are not convinced the interest rate rising cycle is finished. On Friday, better-than-expected US growth and consumer confidence figures saw the Dow end the week close to the 10-day moving average.
The week ahead has limited news releases, with only Retail Sales on Tuesday and FOMC Minutes on Wednesday likely to draw interest. The sideways conditions will likely continue again this week, but strange moves can happen during quiet conditions, so ensure you follow your stop losses.
Resistance: 36000, 36500, 37000
Support: 35000, 34600, 33610, 33000, 32550, 31750
Nikkei 225 Index
The start of the Obon holidays this week resulted in a shortened week for the Nikkei. Boosted by optimistic earning forecasts from Japanese companies and China allowing tourist groups to travel to Japan again, the Nikkei closed around 1% higher on the week.
The USDJPY resumed its uptrend returning to 145.00 as the 10-year bond yield fell to 0.58%, which is positive for Japanese stocks. Signs that Japanese inflation is slowing mean the Bank of Japan will likely continue its loose monetary policy stance.
Holidays will continue to reduce interest in the market this week, so there could be limited trading opportunities. The sentiment is turning positive again for the Nikkei, so looking for buying opportunities is the best short-term strategy.
Resistance: 34000, 35000
Support: 31650, 30800, 30500, 30000
